Eli Lilly has had an ideal run, but UBS expects about 16% further upside in the approaching months as a gentle stream of positive news propels the stock higher and revenue growth accelerates. Calling it the “best fundamental story” amongst U.S. large caps, UBS analyst Colin Bristow on Friday lifted his price goal to $612 from $526. The stock has already gained 47% 12 months thus far, totally on the back of lofty expectations for weight-loss drug sales. LLY YTD mountain Eli Lilly shares are up about 47% 12 months thus far. Bristow said the valuation is warranted attributable to Eli Lilly’s expected five-year top-line compound annual growth rate of 18%, which is an outlier within the sector. A stocked pipeline By the tip of this 12 months, U.S. Food and Drug Administration approvals are expected for Mounjaro as an obesity treatment and for donanemab for Alzheimer’s disease, Bristow said. While each of those drugs have received a number of positive attention, Eli Lilly has other products within the pipeline as well that would also function stock catalysts. There’s mirikizumab, a treatment for ulcerative colitis that could possibly be approved by the European Union and resubmitted within the U.S. by the tip of this 12 months, the analyst said. Approval of lebrikizumab, an atopic dermatitis treatment, is predicted within the fourth quarter, while Jaypirca could get the nod to treat patients with chronic lymphocytic leukemia by year-end, he added. Bristow also expects data for its Crohn’s disease treatment by year-end, in addition to readouts on Verzenio for prostate cancer. By 2024, Eli Lilly is predicted to submit data for a cell therapy for Type 1 diabetes. Finally, by the center of next 12 months, Bristow expects top-line results from the phase 2B study of bimagrumab for obesity and chubby patients who don’t have Type 2 diabetes. Eli Lilly announced plans in July to accumulate Versanis , the developer of bimagrumab, a monoclonal antibody that is predicted to assist patients shed some pounds without eroding muscle mass. Bristow’s price goal is above the common goal of $543.49 on Wall Street, in line with FactSet, and far of his optimism is centered on the corporate’s potential to treat obesity and chubby. The brakes are off In line with the analyst, Novo Nordisk’s Select trial “took the brakes off market size” potential for Eli Lilly’s Mounjaro. That study, which has yet to be peer reviewed, showed a 20% reduction in cardiac events corresponding to stroke and heart attack when patients took Novo’s semaglutide. Many analysts expect this study will help persuade health insurers to offer coverage of weight-loss drugs , which can help Eli Lilly as well. Bristow now expects peak sales for Mounjaro of $40.8 billion, up from $35.8 billion. There’s potential for much more upside if the drug adds other indications corresponding to renal treatment, he said. “Supply stays the important thing near-term risk to the story but ultimately, this can be a top quality problem that LLY appears to be on top of,” Bristow wrote. — CNBC’s Michael Bloom contributed reporting.
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